Paradise complete with tax benefits
WITH taxes for top earners sure to increase in the coming years, there has been much talk of City types moving abroad. Switzerland has been the country mentioned most often. The lure of Geneva, Zurich and Zug, it is supposed, will prove irresistible to London-based bankers because of the low tax regime. But will it really? The mountains might be great, and the fondue is tasty, but these charms might well not be enough to tempt British nationals.
There are other low-tax regimes, though, which could prove interesting to Brits who want to flee their country as banker-bashing becomes more fashionable. One which could prove attractive is the British Virgin Islands (the BVI), where the average temperatures are high, the sand is white, the language is English and the national anthem is God Save the Queen.
The BVI, which consists of 60 small Caribbean islands, is not officially a tax haven. In 2009 it signed an OECD agreement that it would obey internationally approved regulations for tax disclosure, taking it off the “grey list” of tax havens. It is friendly to business, though. As of June 2008, 823,502 offshore companies were registered there. And the country relies on these companies, with just over half of its tax revenues coming from licence fees for offshore companies.
The US government’s crackdowns on places such as Grand Cayman and Bermuda have hardly affected the BVI, says estate agent Savills’ Chris Smith, largely because it does a lot of its business with Europe and Asia and so is ignored by the White House. Unlike St Lucia and Anguilla, development has been relatively sedate. With prices increasing by around 8 per cent a year, it has avoided a boom and property here makes a sound investment. It’s no surprise, says Smith, that he is seeing a lot of interest from British nationals. “It’s not that anything much has changed here – it’s just that the taxes are getting worse in the UK,” he says.
Home-owners in the BVI avoid capital gains and inheritance tax, though if you’re a British resident, you still have to declare it at home. Smith says it’s fairly common for people to register a company in the BVI and put their assets in that company’s name as a way of limiting tax liability.
FINANCIAL CONTRIBUTION
Some tempted by the BVI also look to neighbouring Nevis, which offers “economic citizenship” to those who make a financial contribution to the country. To qualify, you must invest at least $350,000 in an approved property development, or you can contribute $200,000 to the Sugar Industry Diversification Foundation, a charity. In exchange, you and your family get full citizenship. As Smith points out, it then becomes more straightforward to be non-resident in the UK for tax purposes.
Smith describes the BVI as the best of all worlds – it trades in US dollars, but happily remains under British jurisdiction. There is zero unemployment, which attracts employees from nearby, poorer Caribbean islands such as Dominica – less than half of its residents are native islanders. The BVI is perhaps not for those who love the high-life – gambling is illegal so you won’t find casinos, nor are there much in the way of nightclubs, and the island just got its first cinema. But for those who can live without parties, and who remain immune to the charms of alpenhorns and cuckoo clocks, it has a lot going for it.
FRENCHMAN’S CAY, TORTOLA
Price: £1.9m
This four-bedroom home has more charms other than its beautiful views. It has a boat mooring in Sopers Hole Marinais, it’s in an exclusive gated community and it’s in a convenient location. From Savills, contact: 020 7016 3740 www.savills.com/abroad
Reference Number: 7514
CASA BLANCA, VIRGIN GORDA
Price: £1.9m
This property has panoramic views as well as being a short distance to the sea. It includes three bedrooms, a pool and three bathrooms and has an excellent garden.
From Knight Frank, contact: 020 7629 8171, email: [email protected]
COCCOLOBA, NEVIS
Price: £1.7m
A sophisticated and modern home with some old fashioned touches, like cathedral ceilings and plantation-style verandahs. On a clear day it is possible to see to St Barts and St Kitts.
From Caribbean Property International, contact: 020 7622 6515, www.caribbeanproperty.co.uk
TORTOLA HOUSE
Price: £1.2m
A three-bedroom villa on Tortola, this property has a master and two other bedrooms in a separate building, and all have en suite bathrooms. The amenities of Long Bay Resort is nearby with its beach, large pool, shops, spa, and restaurants. Contact Walter Zephirin, tel: 020 8960 1010, www.7thheavenproperties.com